Brian Scudamore, 29, doesn't mind when even his friends tell
him he has a junky company. His business, 1-800-GOT-JUNK?, in
Vancouver, British Columbia, hauls away what those who are moving
leave behind--for a price.

All those truckloads of trash are adding up: Scudamore expects
to do $1.8 million in sales this year. And $60,000 of that will be
barter, the oldest form of doing business, but with a modern twist.
Scudamore belongs to Barter Business Exchange, Canada's largest
commercial barter organization, which acts as a clearinghouse for
whatever members want. Instead of traditional barter, which
requires each business to want what the other has, members use the
exchange like a bank. They are paid with "trade dollars"
deposited within the organization and can write checks for whatever
they want on their own accounts.

"I've used barter credits to have my logo designed, get
office supplies, buy computers and have them networked, and hold
parties for the staff," says Scudamore. "Whenever I need
to spend, I see if I can use barter first because if you do it
right, it's just like cash."

But the advantages to barter extend far beyond a cash
substitute: "You get business you might not otherwise have,
because [members] come to you specifically because you're on
the exchange," Scudamore explains.

The cost of joining a barter system is well worth it, say barter
fans. Trade exchanges charge an annual cash fee to belong,
typically $100 to $300, or a monthly charge of $10 to $20 (half
cash), plus a 10 to 12 percent fee (in cash) per completed
transaction, paid by the seller. Just keep in mind the IRS treats
barter as regular income. When tax time comes, use Form 1099B to
report your barter income.

In North America this year, about $1 billion in trade
transactions will be generated through 500 retail trade exchanges
that represent approximately 50,000 small and midsized businesses,
says Robin Maini, executive director of the International
Reciprocal Trade Association. In fact, the volume of barter is
growing by more than 20 percent every year.

Last year, Tigre Entertainment Corp., a television and film
production company in Fairfield, Connecticut, was caught in a cash
squeeze as it was expanding when a seasonal slowdown hit.
"Barter saved my business," contends owner and president
Barry Greene, 33, a member of the International Trade Exchange of
New York City. "I could even [pay for personal expenses like]
groceries with trade dollars instead of taking a cash salary."
Fortunately, Greene already had his employee benefits package
funded with barter credits. He expects to spend more than $250,000
in the system this year.

Greene also knows barter attracts more business: "I use the
exchange's Web site to reach its 150 offices, effectively
making them an outside sales force to market to potential customers
I probably would otherwise never reach."

Hit The Clubs

There are two associations through which you can find a local
barter system. (Also check the Yellow Pages under
"Barter.") The International Reciprocal Trade
Association (http://www.irta.net, 312-461-0236)
represents 130 organizations, including those with offices in
multiple cities and countries. The National Association of Trade
Exchanges (http://www.nate.org, 216-732-7171) has 80
member organizations with single-city offices in North America.

Before you join an exchange, read its rules carefully and survey
half a dozen members you might want to use from its catalog to see
how satisfied they are. No system is perfect, so expect some
complaints about lack of available items or incoming trade. (Being
aggressive in marketing your business to other members definitely
makes a difference, barter enthusiasts note.) Be sure to ask:

Do trade brokers put in an effort to make matches in a timely
manner?

How many members have notified the exchange they have taken in
too much barter to accept any more at the moment? Make sure the
businesses you're interested in aren't temporarily out of
the system.

What kinds of businesses are allowed to take in a percentage of
a transaction in cash because of low profit margins?

Does the system expel members who inflate prices for
barter?

How many competitors are near you?

How often is the catalog published? Not everyone will notice a
mention in a newsletter that you've joined.